Having owned a 20+ person services business I can tell you that the paperwork/taxes/regulations around employees was frustrating. Yes, you can outsource this stuff, but why make it so complicated? Added to that, it was a virtual company with employees in 10+ states, it was a nightmare.<p>It's comparatively much easier to just pay a contractor a higher hourly rate and let them pick their own health care, retirement, time off policy, etc.
The media's desire for a short and snappy title makes it misleading. It's really about <i>"The End of (Vertically Integrated) Employees"</i>.<p>The various outsourced positions mentioned in the article are still <i>employees</i>. They're just someone else's employees.<p>Companies just don't want to have vertically integrated employees including janitors and cafeteria workers. (E.g. Outsource to Aramark food services and their employees.) They also don't want white-collar employees who aren't necessarily "core" to their business. (E.g. Outsource to Accenture Consulting's employees.)
I predict that at some point some of these highly outsourced companies will face competition from a former internal "contracting" company (or sets of them) that have been doing substantial portions of the direct work.<p>If a company has fewer and fewer essential "walls" separating what they do at the core vs a possible competitor the risk goes up. If one categorizes a peripheral competency as something that should have been in-house then the company becomes at risk of getting quickly subsumed by a competition hiring contractors that the prime company originally trained. And it might not show up for a while unless some assumption shifts - in the meantime the short term profits might look pretty good.<p>Another risk might be the collapse or disruption at a contracted company where you have less control.
This is the goal of the wealthy class and corporations. To treat the common man as a disposable and interchagable cog. It is always more profitable to not have to ensure the cog cannot encounter one medical issue that bankrupts them. It more profitable when you need not show any loyalty to the cog. We can see the end goal where profit is more important than humanity.
The idea of "employment" is actually an aberration in history. For most of time, we had peasants and landlords. The peasants would work the land and would maybe get some food and a place to sleep.<p>Then industrialization came, and those who were skilled were contractors. They would do work for someone and get paid for the work they did. Then they would hustle for more work.<p>Even in factories, you would show up at the door each day and hope they had enough work for you, and then get paid as you left.<p>It was only very recently that factory owners thought about offering steady pay in exchange for not having to hire a staff every morning.
Hypothesis: this is the result of a long period of labor surplus. If, as seems to be the case in some places like Austin, TX where I live, we are now moving into an era of labor scarcity, there will come unexpected problems. Like, if you find that sometimes important functions don't get done on time because there were not enough people to do it because someone quit unexpectedly, but it's not technically your employee so you don't have much leverage in figuring out what the problem is to make sure you don't get caught short-staffed again.<p>The reason to have an employee is to make sure they are available when you need them. If there are always a surplus of people willing to be there, then outsourcing is a way to reduce your costs. But, if that changes, then the downside of "it's not your problem" becomes more apparent; it still is a problem that impacts you, it's just not _your_ problem, so you can't do much about it.<p>Only some parts of the U.S./world are in a labor shortage situation right now, of course. But until recently, just about nowhere was, and had not been in a long time, so I wonder if this is going to be a painful lesson for some companies.
You don't have "job security" just because you're an employee. You have a wee bit more of it, compared to a contractor, and it depends on your package.<p>Job security is a myth. In computing, it's the subject of a familiar meme: if you're one of the few people that understands some legacy technology that is important and hard to replace, then you have job security. It's a pejorative term: oh, that <expletive> tech, that's just for job security. Nobody who is "with it" wants to touch it.
I am not sure how viable this hiring model is for companies that want to develop bleeding edge IP. Speaking only about development jobs: contractors are nomadic, they're not tied or married to your success or failure. From a developer POV, that's not a bad thing. You can just come in, do your thing, and move on to the next great adventure. From the employer side, each time you are training someone new to become familiar with your code base, your company intricacies and peculiarities, etc. which takes time and effort, and learning from failure, time for which may not be available. And the end result is that you may end up with a mish mash that doesn't work well together because the people who made it are gone or moved on. Also, developing is mentally exhausting. Not sure what dev, unless they're really desperate, will want to indulge this and expand that kind of mental effort for less payout or benefits. Or maybe the company only hires these for less innovative stuff or CRUD jobs.
<a href="http://archive.today/XirsP" rel="nofollow">http://archive.today/XirsP</a> - Link for those who don't pay for WSJ.
While this is convenient and cheaper for businesses, it also removes financial incentives in place to help businesses succeed. This seems to be short term advantageous but long term destructive.<p>Many a good business idea has come from someone who felt they had something to gain from the company succeeding. Contractors have incentive to put up and shut up, after all, argue with the boss and you are replaced.<p>It also gives core business competency to contractors, who can turn around and give that knowledge or experience to competitors, or even open up shop themselves.
Just a few days back on NYT:<p>Maybe the Gig Economy Isn’t Reshaping Work After All<p><a href="https://mobile.nytimes.com/2018/06/07/business/economy/work-gig-economy.html" rel="nofollow">https://mobile.nytimes.com/2018/06/07/business/economy/work-...</a>
> Janitorial work and cafeteria services disappeared from most company payrolls long ago. A similar shift is under way for higher-paying, white-collar jobs such as research scientist [...]<p>Wait, what? What kind of research scientist are we talking about here? The ones that work at Google Brain, DeepMind, etc., the ones formerly known as data scientists at Lyft, or the ones employed by universities that research niche scientific fields?
Isn't the title a bit misleading? It's not the end of employees, it's allowing other entities to specialize in the 'HR' side of things - staffing, payroll, etc, and then contracting with those entities. There are still 'employees' in that sense, they are just 'employees' of the contracting firm.
><i>About 70,000 TVCs—an abbreviation for temps, vendors and contractors—test drive Google’s self-driving cars, review legal documents, make products easier and better to use, manage marketing and data projects, and do many other jobs. They wear red badges at work, while regular Alphabet employees wear white ones.</i><p>A long time ago, Akio Morita, the legendary head of Sony, commented that, even if 4 out of 5 employees were mediocre or poorly behaving, there was 1 employee out of the 5 who was so good, so full of useful ideas and innovation, that he/she made up for the low efficiency of the others. So, Morita didn't want to try and cherry pick the employees. He kept everyone.<p>But Google appears to be pursuing a different strategy.
For any company that scales up past a certain size, it can be cheaper to run their own department to handle things at volume, than to pay an outside company the costs of handling things at volume plus their markup. They can customize and specialize for their own needs, too.<p>So there will always be integrated employees somewhere.
Isn't this almost a repeat of what Microsoft was dealing with in the 90s? Wasn't that whole issue a big deal at one point? I remember them trying to make as few people as possible blue badges (FTEs), causing all sorts of resentment from their contractors for many years.
The end of employees, and perhaps the start of payroll simplification? Literally every country expects their businesses to go through arduous, arbitrary calculations just to pay people. I run <a href="https://usebx.com" rel="nofollow">https://usebx.com</a> and we're in the process of building payroll into our app. It has to be one of the most fiddly bits of dev we've done, with multiple edge cases lurking at every corner to break our logic. I mean, if you make the admin around employing someone so difficult (and expensive), it's hardly surprising that businesses do what they can to avoid it.
In many ways the "end of employees" parallels the "end of marriage." Many people take the option of short term relationships. What's interesting is that society tries to deal with the change by trying to tame the new trend.<p>For employment, it's government trying to classify Uber drivers as employees to give them protections. In relationships, it's governments attempting to set up alimony when co-habitating couples split up.
Can't help but see this also as the perpetual struggle between business and state.<p>State adds regulations, businesses look for areas where regulations are fewer, and try to do more business at these areas. Then the cycle repeats.<p>Taxi vs Uber, hotels vs AirBnB, employment vs contracting,..
There will continue to be less and less security for workers who perform tasks where training and performance are well systematized and unique judgement and skill (think classical professionals) is not a value added.<p>This is the nature of a healthy and functioning economic system. The question is, how do humans provide for themselves a semblance of predictability and sustainability to their work and income?<p>These problems have been solved before. We simply need to expand our thinking a little. Collective bargaining, wage & hour laws, and various systems of education have all worked. The problem evolves as the economy evolves. One thing we should also consider fixing are laws that drive companies to want to outsource certain types of work.<p>I'm sure we will figure this out. What concerns me instead, is the full 10%+ of the population who have such a low IQ that the economy has no use for them. I don't mean this as a normative statement. This is a point of fact. 10% of the adult population has an IQ so low that there are no jobs you can effectively train them for. As automation increases the need for the next 10% will diminish, and so on. This is a problem we have no proven solution for.
Another failure mode of the American capitalism model. Not an employee, no benefits, no retirement, no job security, disposable. If enough suckers get become contractors, maybe we can finally get universal healthcare and a stronger social safety net.